Real Estate Financing in Dubai: All you need to know!

Especially when it comes to real estate financing in Dubai it’s important to know your options beforehand. So that you can maximise your investment portfolio. Whether you’re a resident or a foreign investor, understanding your mortgage options and other financing options is crucial for your investment successful. In this blog, we’ll discuss everything you need to know about financing real estate in Dubai. Before we talk about the standard mortgage options, let’s first look at the alternatives:

Alternatives for Real Estate Financing in Dubai

In addition to traditional mortgages, there are other financing options available in Dubai:

• Off-plan Financing: For those interested in properties that are still under construction, some developers offer flexible payment plans. This means that you pay for the property in stages. Often without interest charges, until construction is complete. This option often offers cheaper purchase prices and higher returns than existing construction. Read more about payment plans here .
• Islamic Financing (Sharia-compliant): Also known as "Ijara" or "Murabaha", this type of financing takes into account Islamic law. It operates on the basis of rental or profit sharing agreements instead of conventional interest.

Off-plan real estate is cheaper than existing real estate and gives you the option to pay in instalments without interest costs. 

Mortgage Options for Foreigners

One of the first questions that foreign investors have is whether they are eligible for a mortgage in Dubai. The good news is that several banks in Dubai offer mortgages to foreigners. However, the terms and conditions may vary.

• Amount: Foreigners can usually borrow up to 50-60% of the market value of the property. This means that you must have paid at least 40-50% of the purchase price before you can start with real estate financing in Dubai.
• Interest: Interest rates in Dubai vary depending on the bank, the type of property and the loan term. The interest rate can be fixed or variable, with fixed rates usually being more attractive to investors looking for stability. The interest rate currently hovers around 5%. Of course, there is also a choice between fixed and variable rates.
• Term: The maximum loan term is usually 25 years, depending on the age of the applicant and other factors. Please note that borrowing money over the age of 65 can be a challenge in Dubai.

 The interest rate is linked to the EIBOR (Emirates Interbank Offered Rate) and may fluctuate.

Mortgage Options for UAE Residents

The good news is that most UAE residents are in a slightly more favourable situation than non-residents.

• Amount: UAE residents can usually borrow up to 80% of the market value of the property for their first home. For second homes or investment properties this percentage can be lower. This is usually around 65-70%.
• Interest: Also, interest rates for real estate financing in Dubai are currently hovering around 4.5-5%. This is slightly lower than for foreigners. In general, residents are offered a more competitive interest rate.
• Term: is the same as for foreigners.

Your total monthly debt (including mortgage payment) cannot exceed 50% of your monthly income.

Requirements for a Mortgages

To get a mortgage in Dubai, foreign and domestic investors must meet certain requirements:

• Liquidity: Banks usually require a minimum monthly liquidity in your bank account. This can vary from bank to bank. A healthy cash flow in your bank account is essential to qualify (think of at least $16,000 balance per month). The "health" of a bank account is usually the main thing that the bank looks at.
• Income: If you want to use your savings account when applying, the bank will also ask for proof of your income/payslip.
• Documentation: You will need documents such as a passport, bank statements for the past six months and proof of income (such as payslips). If you are a UAE resident you will also need to provide a copy of your Emirates ID.

Did you know that you can also become a financier for developers in Dubai?!

Conclusion on Real Estate Financing Dubai

Real Estate Financing in Dubai is therefore diverse for both residents and foreign investors. Whether you opt for a traditional mortgage, off-plan financing or a Sharia-compliant option. It is essential to be well informed and make the best choice based on your financial situation and goals. With the right preparation and knowledge, you can make your real estate investment in Dubai successful and profitable.

We are happy to look with you at which options suit you! Contact us or also read more on our website under financing.

Article references: Bayut | Mortage Finder | Lion | Off plan | Dubai